28 Apr Fraud and Corruption – “Think the Unthinkable”
“They’ve worked in their jobs for more than 10 years, they’ve got a taste for luxury and more often than not they have a gambling addiction. Employers watch out – they could be stealing millions of dollars from your organisation.”
A recent article by Yolanda Redrup at SmartCompany cites recent research which reveals that “since January 1, 2000, employee fraud in Australian financial institutions has cost businesses and clients $217,266,481”. As we all know, fraud and corruption is not just limited to the world of banking and finance. The Commonwealth Auditor General’s Office reported that, between 2008 and 2010, Commonwealth agencies reported losses due to fraud of more than $1 billion. Every day, the media reports allegations of bribery and corruption resulting in significant political and reputational fallout.
In Western Australia, the 2013 Auditor General’s Report “Fraud Prevention & Detection in the Public Sector” highlighted concerns from the WA Police regarding the number of incidents of public sector fraud, “which indicated that agencies’ approach to minimising fraud and corruption were not effective”. As a result, the Office of the Auditor General (OAG) audited 9 agencies “seven of which had experienced incidents of fraud or corruption in recent years”. In conclusion, the report stated that “Most agencies lacked a co-ordinated approach to managing fraud and corruption risk.”
So what is your organisation doing to ensure that any potential exposure to fraud, corruption and official misconduct is understood and managed? Does your organisation have a good understanding of the nature and level of risk that exists and do you have assurance in relation to the strength and effectiveness of your controls?
All organisations should have in place an effective fraud control framework which addresses three essential components; prevention, detection and investigation/response.
Fraud prevention needs to be rigorous enough to identify the areas, business functions and activities which generate the highest exposure to fraud. It needs to encourage staff, managers and executive groups to “think the unthinkable” in order to make sure that any controls that are in place are effective, and the means and the mechanisms of how they could be overridden have been considered.
Riskwest provides assistance to its clients to understand and assess the risk of fraud, corruption and official misconduct, by taking clients through an exposure analysis, risk assessment and controls evaluation process. Riskwest is also delivering a ½ day training seminar on “Managing Fraud, Corruption and Misconduct Risks”.